Johnson & Johnson (J&J) & Logistics Management Solutions (LMS)

Health & Personal Care Conference

April 12, 2011

Johnson & Johnson Overview

Founded in 1886 in New Brunswick, NJ

World’s most comprehensive & broadly-based

manufacturer of health care products

Over 110,000 employees

Selling products in over 175 countries

Facilities in over 50 countries

Over 210 decentralized operating companies

Consumer ProductsConsumer Products

GTO Overview

Function like an “Internal 3PL/Shared Service” with responsibilities for Transportation activities across the enterprise

Product PortfolioConsumer ProductsMedical Devices Pharmaceuticals

Scope In / Out / Within North America

Modes of Transportation Air Ocean Truckload LTLIntermodalCold Chain

Global Transportation Organization Mission Statement

GTO Team Structure

J&J – LMS Relationship

Relationship Overview

In 2007 we sought out a partner to:Provide tactical level support in several areas, including:

Freight Payment bill resolutionTrack & Trace

Initial value proposition enabled:Continued GTO growth within J&J with available resources Continued focus on key areas of competency including

Sourcing & Supplier Performance International Trade ComplianceOperations

Relationship with a partner with a demonstrated track record of service and performance in the Transportation space

Growth & Expansion

As value was demonstrated early on additional

opportunities were identified, including:

Project based support work

Trade Customization / Display tactical support

On-site load planning at remote distribution centers

Compliance review / filing

Call Center Operations

Off-hours support for CPFR functions

Integration into the business

On-site account management played a key role in

relationship development

Detailed understanding of J&J business & requirements

Immediate / visible support when needed

Continued discussions on business and any challenges

allows a collaborative problem solving approach

SAP / TMS Upgrades

Freight Payment enhancements

As value was demonstrated marketing became easy, both

within GTO and J&J

Integration into the business

Master Service Agreement (MSA) provides a clear understanding

of rules of engagement as it outlines:

Pricing structure

Supply of services

Confidentiality agreements

Indemnification

Employment practices

Subcontracting

Audit functions

Severability

Insurance

Data Safeguards

Dispute resolution process

Keys to success:

Ensure requirements are clearly documented

Ensure KPI’s are established upfront

Develop a shared understanding of success

Quarterly business reviews enable visibility to total

business relationship and provide an opportunity for

higher level visibility of relationship

Maintain open lines of communication

On-going involvement of leadership from both sides

Keys to success:

Leverage best practices of both organizations:

Training & development

Technology

Market Intelligence

Invest the time in developing the relationship

Ensure roles & responsibilities are clearly understood (co-

employment)

Thank you!

Information-based 3PL

Established in 1996 in St. Louis, MO

21 On Site Command Centers in North America

Transportation Management Services & Software

LMS Company Overview

January of 2007 - GTO RFP for Tactical Logistics Support

TMS SupportExport and Compliance Support Freight Payment Resolution and SupportShipment Tracking & TracingCall Center / Transportation Planning

Provided On and Off Site Personnel based on business need Dedicated Account ManagerInitial team of 5 providing tactical support

Partnership Engagement

Started with tactical non strategic roles.Initial engagement allowed for LMS to learn the complexities of the JJ organization as well as the role of the GTO.Inclusion of Account Manager and team members in business planning meetings allowed LMS and JJ to identify additional opportunities for our partnership.Created a transparent pricing model that eliminated negotiations and allowed for scalability.Developed processes to expedite opportunities in order to react quickly to the dynamic needs of JJ.

Partnership Evolution

Communication is KeyContinual Evaluation

Ongoing Identification of Opportunities to:Lower CostProvide Better ServiceAugment Current Process with TechnologyProvide a platform that allows for easy expansion and contraction based on JJ business partner needsManage to KPI’s and Pay for PerformanceBetter back up Creative Solution Development

Partnership Optimization

Quarterly Business Reviews – CriticalDefinition and agreement on performance metrics – distributed regularly to team and managementValue driven mind set vs. Short term win mind setJointly created goals - short and long termInclusion of 3pl in project planning and business changes (SAP implementations; Upgrades; Acquisition implementations etc) Defined processes to handle new opportunities (SOW) and issue resolutionTrust and transparency in the relationship

Partnership Best Practices

Learn the landscape and adapt to it!Do not under or over estimate your valueQuick fixes do not work – take the time to do it rightBe creative with solutions and processesAlways be flexibleBe open to new and different ways of working together – embrace change!Trust and communicate at all levels

Partnership Lessons

Coming together is a beginning.Keeping together is progress.Working together is success.

- Henry Ford